Payment Order update: an option for creditors that doesn't prevent them from filing substantive proceedings
The Saudi Arabian Council of Ministers has issued a new law on court fees (the Law). The Law was enacted by the Royal Decree No. M/16 dated 30/01/1443 COR. 7 September 2021. The Law’s aims include limiting vexatious claims and encouraging litigants to amicably settle their disputes. In this article, we provide a high-level overview of the Law.
The Law is due to be supplemented by implementing regulations which will set out detailed rules and criteria in relation to the applicable fees.
The Law applies to all legal claims and applications except for:
Additionally, the Law exempts certain categories from having to pay court fees. These include:
The fees applicable to claims and applications (as defined in the Law) differ. For claims, the Law stipulates that the fees are not to exceed 5% of the claim value with the maximum fees applicable being SAR 1m. The regulations should set out the precise details in due course.
For claims challenging arbitral awards, the applicable fee will be 1% of the award value with a ceiling of SAR 1m.
In relation to applications, the maximum fee applicable is SAR 10,000. The type of applications this encompasses includes applications for permission to appeal to the Court of Appeal and the Supreme Court and petitions to review a decision.
The Law stipulates a maximum fee of SAR 1,000 for certain applications made by ‘interested parties’ for copies of documents or court records. However, this fee is not payable where the requesting party is an existing party to the proceedings. Thus, it remains to be seen in the implementing regulations who may be deemed an interested party.
No additional fee will be payable where:
Except in limited circumstances, failure to pay court fees does not prevent the court from hearing and determining the claim or application. This could be beneficial to litigants who may not be able to pay the required fees at the time of filing due to financial hardship. It also serves to promote access to justice and ensure that claims that are in the public interest to be heard do not fail at the first hurdle.
The Law also deals with the recoverability of fees and provides for the losing party to reimburse the court fees incurred by the successful party. Further, and in line with the Law’s objective to promote settlements, the Law provides that fees are to be reduced to 25% of the fees payable where the parties settle after the first hearing but prior to the court’s decision in the case.
The KSA Courts should start implementing the Law after 180 days of its publication in the official Gazette Um Al-Qura. Further, the Law provides for the regulations to be prepared within 60 days of the Law’s publication.
Historically, no court fees were payable in Saudi litigation. This may have encouraged vexatious claims or a party bringing repeated claims to pressure its counterparty. The introduction of court fees will make parties think long and hard before commencing claims that have little merit and will hopefully encourage more parties to resolve their disputes out of court.